Investors Find Reasons to Be Thankful November 23, 2020 Weekly Update Print Please note: This update was prepared on Friday, November 20, 2020, before the market’s close. StocksA financial instrument giving the holder a proportion of the ownership and earnings of a company. bounced around this week as investors weighed upbeat news about vaccines against looming lockdowns caused by a surge in U.S. coronavirus cases. This morning, Pfizer announced plans to file for emergency-use approval from the FDA for its COVID-19 vaccine in hopes that distribution could begin as early as mid-to-late December—a possible holiday miracle given the typical years-long vaccine development timeline. Good news aside, we won’t be in the clear this year—more than 182,000 people tested positive for COVID-19 yesterday alone. Meanwhile, more Americans filed for unemployment benefits last week than the week before as the rebound in the job market reversed course. This, plus signs that renewed stimulus talks are on hold in Washington, bodes poorly for year-end spending. Looking ahead to Thanksgiving, investors still have plenty to be grateful for: Through Thursday, the Dow Jones Industrial Average was up 5.5% for the year, while the broader S&P 500 index had returned 12.7%. Foreign stocksA financial instrument giving the holder a proportion of the ownership and earnings of a company. are showing fractional gains for the year with the MSCI EAFE index, a measure of developed international stockA financial instrument giving the holder a proportion of the ownership and earnings of a company. markets, returning 1.6%. As of Thursday, the Bloomberg Barclays U.S. Aggregate BondA financial instrument representing an IOU from the borrower to the lender. Bond issuers promise to pay bond holders a given amount of interest for a pre-determined amount of time until the loan is repaid in full (otherwise known as the maturity date). Bonds can have a fixed or floating interest rate. Fixed-rate bonds pay out a pre-determined amount of interest each year, while floating-rate bonds can pay higher or lower interest each year depending on prevailing market interest rates. index’s yieldYield is a measure of the income on an investment in relation to the price. There are several ways to measure yield. The current yield of a security is the income over the past year (either dividends or coupon payments) divided by the current price. stood at 1.18%, down from 2.31% at the end of 2019. On a total return basis, the U.S. bondA financial instrument representing an IOU from the borrower to the lender. Bond issuers promise to pay bond holders a given amount of interest for a pre-determined amount of time until the loan is repaid in full (otherwise known as the maturity date). Bonds can have a fixed or floating interest rate. Fixed-rate bonds pay out a pre-determined amount of interest each year, while floating-rate bonds can pay higher or lower interest each year depending on prevailing market interest rates. market has gained 7.1% this year. Thanksgiving may look different this year for most of us. Sharing turkey and proposing toasts over Zoom doesn’t hold a candle to crowding around a table with our loved ones. But if recent trends in the markets are any indication, we can look forward to better days ahead with more time spent together in the future—especially if we can get science and common sense working in tandem. Happy Thanksgiving from all of us here at Adviser Investments. Tech Takes a Breather The post-election relief rally and uplifting vaccine news sent several indexes soaring, with the Dow, S&P 500, S&P MidCap 400 (medium-sized companies) and Russell 2000 (small companies) all rising to record territory this month. One index that hasn’t enjoyed a lift: The tech-heavy Nasdaq Composite, which includes many of the stay-at-home stocks that have carried the pandemic-era market on their backs—a clear sign of traders taking some profits and rotating into other market sectors this month. We don’t see this switch as a permanent preference for value stocks, even if, for example, benchmark value indexes are currently outpacing their growth counterparts. As disciplined investors, we remain convinced that staying diversified is one of the best ways to attain long-term growth, regardless of market trends. Big Retail Adapts Adeptly The U.S. consumer boosted consumption in October as retail sales rose for the sixth straight month, albeit at a slower pace than prior months, as holiday shopping season approaches. Spending on big-ticket items, like automobiles and electronics, continues to rise while sales at venues such as grocery stores and restaurants are on the decline—possibly a sign that, as we noted earlier, more people are losing jobs and being forced onto the unemployment rolls. “My home is my castle” appears to be the lockdown theme du jour, not only in online sales but also in the strong third-quarter earnings reported by many leading big-box retailers. In no particular order: Walmart’s overall sales rose 6.4% in the quarter ending in October, propelled by a 79% gain in online sales compared to the same time last year Target raced past analysts’ estimates, turning pandemic habits into sustainable growth, with digital sales up 155% and a curbside pickup service that improved by 500% Costco posted record fiscal-year profits as shoppers limited casual trips to the store and instead masked up and stocked up Home Depot’s third-quarter sales jumped 24% from 2019 This is not to say that retailers are breathing easy. They continue to adapt to pandemic conditions with online incentives and curbside pickup, but this holiday season is unlikely to provide the full year-end boost that some are accustomed to. This is all the more reason for Congress to act sooner rather than later to cushion the blow for businesses (and individuals) that are suffering financially, through no fault of their own. Podcast: Should You Refinance Your Mortgage Now? With mortgage rates at historic lows, refinancing has become a hot topic—but is it the right move for you? In this episode of The Adviser You Can Talk To Podcast, Senior Financial Planner Andrew Busa, Account Executive Dina Milne and Vice President Rick Winters present five questions to ask yourself before refinancing the mortgage on your primary residence. The trio teams up to tackle the following topics: Need-to-know loan terms: Points, fixed vs. variable rate, contract rate vs. APR, closing/settlement costs and more What will refinancing cost and how might you save? Considerations when shopping for a lender and taking on debt When refinancing does and does not make sense …and much more Refinancing can be a fantastic opportunity to save some money or free up cash for other purposes, but a misstep can be costly to your long-term financial plans. Click here to hear our experts’ answers to your most pressing refi questions today! And for more on refinancing, here’s our blog post on the subject. Financial Planning Focus: Five Tips for End-of-Year Tax Planning Thanksgiving around the corner means the year is nearly over. With that in mind, we have five tax tips for you to consider before the calendar flips to 2021. Take Advantage of Charitable Deductions: If you are looking for ways to lower your 2020 taxes through deductions, charitable contributions are a popular way to go. Click here for our podcast on the topic, and read our discussions on “bunching” contributions as well as other more advanced charitable giving strategies from earlier this month. “Harvest” Your Losses: Losing money is never fun, but there is a silver lining to selling an investment at a price below what you purchased it for—a lower tax bill. You can use the losses to offset the gains you’d otherwise owe taxes on from other parts of your portfolio. And if your overall losses are greater than your gains, you can apply up to $3,000 against your ordinary income for the year. If you have losses beyond that, they will be carried forward to future years. Plus, as long as you wait 30 days, you can choose to buy back the investment you sold at a loss. Contribute to Retirement Accounts: Review what you’ve contributed to your retirement accounts so far this year—think 401(k)s, traditional IRAs, Roth IRAs, SEP IRAs and health savings accounts. If you haven’t hit your limits and have cash available, now is your chance to potentially minimize your tax bill while investing for your retirement. Use our handy reference guide to 2020 contribution limits (and a bevy of other key financial data) to inform your year-end financial plans. Use Your Flexible Spending Account (FSA): If you have one, check the balance of your FSA. Pre-tax dollars contributed for health care expenses do not roll over every year—use it or you lose it. Confirm your deadline for spending and start strategizing on how to use that cash. What medical supplies can you stock up on? Do you have any receipts from doctor’s appointments that you can submit for reimbursement? Give Your Would-Be RMDs Time to Grow: The pandemic-relief CARES Act allows retirees to forego taking required minimum distributionsA required minimum distribution is the amount of money that must be withdrawn each year from tax-deferred retirement accounts once the beneficiary reaches retirement age (72, according to IRS rules). from their retirement savings accounts for 2020. That means a bonus year of letting your assets compound without forced withdrawals. We’re waiting to see if RMDs are back on the table in 2021; we’ll keep you posted. Tax planning varies from situation to situation—and it’s cloaked in jargon and acronyms—so be sure to speak to a professional if you have any questions. Strategy Activity Update To keep you informed about your investments with us, going forward, we will be providing a summary of the trades executed in our DividendA cash payment to investors who own stock in the company. Income, Tactical Global Growth, Tactical Defensive Growth, Tactical High Income and Tactical Multi-Asset Income strategies, as well as a snapshot of each tactical portfolio’s allocation every week as of Thursday night. Please contact us if you have any questions about any of the moves or our strategies. Dividend Income No trades this week. AIQ Tactical Global Growth Bought iShares U.S. Aerospace & Defense ETFA type of security which allows investors to indirectly invest in an underlying basket of financial instruments (these may include stocks, bonds, commodities or other types of instruments). Shares in an ETF are publicly traded on an exchange, and the price of an ETF’s shares will fluctuate throughout the trading day (traditional mutual funds trade only once a day). For example, one popular ETF tracks the companies in the S&P 500, so buying a share of the ETF gets an investor exposure to all 500 companies in the index. (ITA); reduced cash. AIQ Tactical Defensive Growth No trades this week. AIQ Tactical High Income No trades this week. AIQ Tactical Multi-Asset Income Bought iShares J.P. Morgan EM Local Currency Bond ETF (LEMB); sold SPDR Bloomberg Barclays International Corporate Bond ETF (IBND). Adviser Investments’ Market Takeaways You can find two new Market Takeaways videos on our website. Research Analyst Liz Laprade discussed how one fund manager we invest in is approaching the race for a vaccine, and Vice President Steve Johnson spoke about the tug of war between dysfunction in Washington and good news on the vaccine front. Looking Ahead Next week, markets and Adviser Investments will be closed on Thursday and shutter at 1 p.m. on Friday. Despite the shortened week, we’ll get a bountiful table of reports on manufacturing and the service sector, third-quarter economic growth, durable goods, housing prices, new home sales, and timely reads on consumers heading into the holiday shopping season, including confidence and sentiment as well as income, spending and savings. As always, you can visit www.adviserinvestments.com for our timely and ongoing investment commentary. In the meantime, all of us at Adviser Investments wish you a safe, sound and prosperous investment future. About Adviser Investments Adviser Investments is a full-service wealth management firm, offering investment management, financial and tax planning, managed individual bond portfolios, and 401(k) advisory services. We’ve been helping individuals, trusts, institutions and foundations since 1994, and have more than 3,500 clients across the country and over $7 billion in assets under management. Our portfolios encompass actively managed funds, ETFsA type of security which allows investors to indirectly invest in an underlying basket of financial instruments (these may include stocks, bonds, commodities or other types of instruments). Shares in an ETF are publicly traded on an exchange, and the price of an ETF’s shares will fluctuate throughout the trading day (traditional mutual funds trade only once a day). For example, one popular ETF tracks the companies in the S&P 500, so buying a share of the ETF gets an investor exposure to all 500 companies in the index., socially responsible investments and tactical asset allocation strategies, and we’re experts on Fidelity and Vanguard mutual funds. We take pride in being The Adviser You Can Talk To. Our minimum account size is $350,000. To see a full list of our awards and recognitions, click here, and for more information, please visit www.adviserinvestments.com or call 800-492-6868. Please note: This update was prepared on Friday, November 20, 2020, before the market’s close. This material is distributed for informational purposes only. The investment ideas and opinions contained herein should not be viewed as recommendations or personal investment advice or considered an offer to buy or sell specific securities. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed. Purchases and sales of securities listed above represent all securities bought and sold in each strategy during the period stated. Each strategy’s portfolio generally includes more holdings in addition to the transactions listed above and in some cases the securities listed above may only represent a small portion of the particular strategy’s complete portfolio. Further, the securities listed above are not selected for listing based on their investment performance; thus it should not be assumed that any of the securities listed above were profitable or will be profitable, nor should it be assumed that future recommendations will be profitable. Clients and prospective clients should only make judgements about a strategy’s performance after reviewing the strategy’s composite performance information. There is no assurance that each security listed above will remain in the strategy’s portfolio by the time you have received or read this email. Securities are listed for informational purposes and are not intended as recommendations. Existing investor accounts may not participate in all transactions listed above due to each account’s particular circumstances. Our statements and opinions are subject to change without notice and should be considered only as part of a diversified portfolio. 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